Chamber Calls on SEC to Appoint Advisory Committee to Examine Enforcement Practices

WASHINGTON, DC—Appointing an advisory committee to examine its enforcement practices is one of more than a dozen recommendations made to the Securities and Exchange Commission (SEC) in a study released today by the U.S. Chamber of Commerce.

"Sound regulation and enforcement are needed to ensure that our capital markets remain accessible, competitive, and free of bad actors," said Chamber President and CEO Tom Donohue. "While the SEC has made significant progress in providing more transparent guidelines to determine corporate penalties, its enforcement process is not always fair, consistently and appropriately applied, or respectful of due process."

The Chamber's study cited a number of examples of how the SEC's enforcement program has become increasingly punitive and adversarial in nature, including: the intense pressure on public companies to waive attorney-client privilege and work product protection during SEC investigations; the imposition of large penalties on public companies as opposed to individual wrongdoers; and "industry sweeps," whereby corporations in a targeted industry must respond to broad information requests without an indication of wrongdoing.

A key recommendation of the study urges the SEC to appoint an advisory committee to examine SEC enforcement processes and discover the reasons for a wave of recent litigation losses in which administrative law judges and courts have been critical of the SEC's legal and factual analyses or positions.

The Chamber's study of SEC enforcement practices was the result of extensive legal research and in-depth interviews of former SEC commissioners and senior staff, securities law practitioners, academics, general counsels, and corporate secretaries from public companies.

"This study is intended to be a thoughtful examination of current enforcement practices and serve as a catalyst for consideration of practical reforms beneficial to the SEC, U.S. businesses, investors, and taxpayers," said Donohue. "Both the Chamber and the SEC understand the importance of our capital markets, and we look forward to working constructively with them to make those markets even stronger."

The U.S. Chamber is the world's largest business federation representing more than 3 million business and organizations of every size, sector, and region.

The report can be viewed online at: www.uschamber.comhttp://www.uschamber.com/publications/reports/0603sec.htm

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